- Bookmark
- Share
- CaseIQ
Titanium Capital Investment Ltd & Anor v Jonathan Hughes & Ors
Factual and Procedural Background
The appeal concerned a partnership formed in autumn 2020 to sell Covid-19 lateral flow tests, with the partners agreeing to share profits and losses equally and to trade under a shared business name. One partner supplied funding and administrative support through his own company, while the business sourced tests from a Chinese supplier and later sold them through a distributor connected with the other partner’s family. The partnership was dissolved by email in June 2021, after which both sides continued trading in tests, including sales later described as the Danish deal. The first-instance judge ordered a split trial, and this appeal challenged the resulting findings on post-dissolution liability, conspiracy, and knowing receipt. [Para 48][Para 51][Para 52][Para 53][Para 56][Para 89][Para 96][Para 99][Para 140][Para 141][Para 156][Para 158]
Legal Issues Presented
- What is the proper meaning of “business connexion” in section 29 of the Partnership Act 1890, and did the supplier relationship fall within it? [Para 48][Para 223][Para 230][Para 240][Para 338][Para 339][Para 543]
- Did post-dissolution sales of lateral flow tests fall within section 29 because they were derived from partnership property, the partnership name, or a partnership business connexion? [Para 240][Para 245][Para 429][Para 662]
- Did section 42 of the Partnership Act 1890 apply where both former partners continued trading in different ways after dissolution? [Para 162][Para 449][Para 456][Para 460][Para 661]
- Were the appellants’ unlawful means conspiracy and knowing receipt claims properly disposed of at trial, given the limited closing submissions? [Para 477][Para 497][Para 520][Para 526][Para 508][Para 530]
- Did the secret profit arrangement involving one partner’s separate company affect the other partner’s entitlement to relief? [Para 107][Para 108][Para 398][Para 419][Para 425]
Arguments of the Parties
Appellants’ Arguments
- The appellants submitted that “business connexion” in section 29 should be limited to relationships that are effectively part of goodwill, with some exclusivity, special value, or saleable character. [Para 259]
- They argued that the supplier relationship did not qualify because the partnership merely bought goods from a source open to others, and post-dissolution trading did not involve misuse of partnership property or a continuing partnership business. [Para 259][Para 344][Para 352]
- They said the partnership business was confined to branded tests, so sales of unbranded tests fell outside section 29. [Para 259][Para 393][Para 396]
- They also argued that the other partner’s undisclosed profit-sharing arrangement and lead diversion were so serious that he should not be entitled to complain or obtain equitable relief. [Para 259][Para 398][Para 419]
- On section 42, they contended that two people cannot both be “continuing” and “outgoing” partners in relation to the same business after dissolution. [Para 453][Para 456]
Respondents’ Arguments
- The respondents said section 29 is a free-standing provision and should be read according to its words, supported by older partnership and fiduciary authorities. [Para 262][Para 266][Para 275][Para 298]
- They argued that the supplier relationship was a business connexion because the supplier was selective, the partnership’s access to it was central to the business, and the supplier tried to prevent circumvention of the partnership. [Para 383][Para 384][Para 386]
- They maintained that section 29 continues after dissolution, and that the appellants’ post-dissolution sales derived from partnership assets, the partnership name, or business connexions. [Para 357][Para 390][Para 429]
- They also said the other partner’s misconduct did not extinguish the appellants’ liability or defeat the claims by a clean-hands argument. [Para 418][Para 419][Para 424]
- On section 42, they supported the judge’s view that both former partners could continue different parts of the business after dissolution. [Para 449][Para 452]
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Bank of England v Vagliano Brothers [1891] AC 107 | A code-like statute should first be read by its natural meaning; prior law is secondary unless the words are doubtful. | The court used it to justify looking beyond the bare wording of section 29 because “business connexion” was ambiguous. [Para 52][Para 53][Para 54][Para 55] |
| Helmore v Smith (1887) 35 Ch D 436 | Partners stand in a particularly strong fiduciary relationship. | It supported the court’s view that partnership law should align with broader fiduciary principles. [Para 56] |
| Don King Productions Inc v Warren [2000] Ch 291 | Post-dissolution renewal opportunities and profits can be subject to fiduciary accounting. | The court treated it as a key analogy for partnership assets, goodwill, and post-dissolution profit accountability. [Para 56][Para 66][Para 165][Para 166] |
| Chan v Zacharia (1984) 154 CLR 178 | The “no conflict” and “no profit” rules require fiduciaries to account for gains obtained through their position. | It was relied on as the leading statement of fiduciary profit-accounting principles by analogy to section 29. [Para 60][Para 296][Para 298][Para 302] |
| Willett v Blanford (1842) 1 Hare 253 | “Connexion” and goodwill can overlap in post-dissolution profit analysis. | The court used it to support the view that a valuable business relationship can count as a connexion. [Para 57][Para 69] |
| Dean v MacDowell (1878) 8 Ch D 345 | Partners must not use partnership assets, information, or position for private gain. | It was used to show that information can be partnership property and to explain the scope of the duty to account. [Para 58][Para 144][Para 152] |
| Aas v Benham [1891] 2 Ch 244 | Section 29 reflects pre-existing partnership law; the duty to account is tied to partnership property and business connexions. | The court relied on it for the relationship between partnership information, goodwill, and business connexion, and for the limits imposed by the scope of the business. [Para 59][Para 66][Para 145][Para 153] |
| Recovery Partners GP Ltd v Rukhadze [2025] UKSC 10, [2026] AC 209 | A fiduciary must account for profits sufficiently connected with the fiduciary relationship. | It was used to confirm that post-termination profits may still be caught if they are sufficiently connected to the fiduciary relationship. [Para 61][Para 303][Para 641][Para 642] |
| In re Jarvis [1958] 1 WLR 815 | A trustee may have to account where profits are made from goodwill and earlier supplier connections. | The court discussed it as an analogy but limited its value, especially because it was not a partnership case. [Para 62][Para 63][Para 624][Para 625] |
| Trego v Hunt [1896] AC 7 | Goodwill includes customer connection, and a former partner may not use special knowledge to recapture sold custom. | The court used it to explain goodwill, customer connection, and the post-dissolution limits on solicitation. [Para 64][Para 171][Para 173][Para 175][Para 176] |
| John Taylors v Masons [2001] EWCA Civ 2106 | A long-standing relationship can be a business connection and a partnership asset. | The court relied on it as modern support for treating a valuable third-party relationship as an asset for section 29 purposes. [Para 65][Para 66][Para 67][Para 68][Para 69][Para 103] |
| Const v Harris (1824) Turn & R 496 | A partner complaining of default must be ready to do his own duty. | It was cited in the appellants’ clean-hands/reciprocity argument, which the court rejected. [Para 88][Para 400] |
| Reilly v Walsh (1848) 11 Ir Eq 22 | A defaulting partner may lack equity to seek relief. | It formed part of the appellants’ argument that misconduct barred relief, but the court did not accept that proposition. [Para 88][Para 402] |
| M'Lure v Ripley (1850) Mac & G 274 | A partner who fails to perform may lose entitlement to partnership information or advantages. | It was cited as part of the appellants’ reciprocity submission, which the court held did not go far enough. [Para 88][Para 403] |
| Purdon v Miller [1961 (2)] SA 211 | A repudiating partner may not enforce strict partnership rights against a co-partner. | It was used in support of the appellants’ clean-hands argument, which the court rejected on the facts. [Para 88][Para 408] |
| Akman v Chipman (1987) CanLII 5286 | It followed M'Lure v Ripley on reciprocal partnership obligations. | It was mentioned as confirming the appellants’ equitable argument, but it did not change the court’s conclusion. [Para 88][Para 410] |
| Royal Bank of Scotland plc v Highland Financial Partners LP [2013] EWCA Civ 328, [2013] 1 CLC 596 | The clean-hands doctrine is limited and requires a close relation between misconduct and the relief sought. | The court used it to reject the argument that the other partner’s misconduct barred relief under section 29. [Para 91] |
| Richardson v Blackmore [2005] EWCA Civ 1356, [2006] BCC 276 | Misceance in the background does not necessarily prevent relief if it is not directly connected to the issue. | It supported the court’s view that the misconduct complained of did not automatically defeat the partnership claim. [Para 92] |
| Hopper v Hopper [2008] EWCA Civ 1417 | Section 42 governs post-dissolution profits where continuing partners use former partnership assets. | The court used it to state the orthodox scope of section 42 before finding the judge had stretched it too far. [Para 101][Para 442] |
| Pathirana v Pathirana [1967] AC 233 | Section 42 can apply even where only one partner continues the business. | It was cited as authority on section 42’s operation in the post-dissolution setting. [Para 102][Para 103] |
| Duncan v The MFV Marigold PD145 [2006] SLT 975 | Sections 29(2) and 42 can overlap after dissolution. | The court used it to explain that both provisions may sometimes apply during winding up. [Para 103] |
| OBG Ltd v Allan [2007] UKHL 21, [2008] 1 AC 1 | For unlawful means conspiracy, intention to injure must be properly shown; foreseeable consequence is not always enough. | The trial judge relied on it, and the Court of Appeal later held the conspiracy claim should have been decided on the merits. [Para 112][Para 113][Para 499] |
| El Ajou v Dollar Land Holdings [1994] 2 All ER 685 | Knowing receipt requires breach of fiduciary duty, traceable receipt, and knowledge. | The court used it to identify the elements of the knowing receipt claim and then found those elements were met as against Company A. [Para 125][Para 537] |
| Bank of Credit and Commerce International (Overseas) Ltd v Akindele [2001] Ch 437 | The recipient’s knowledge must make retention of the benefit unconscionable. | The court used this test to conclude that Company A’s receipt was unconscionable. [Para 126][Para 537] |
| IRC v Muller & Co.'s Margarine Ltd [1901] AC 217 | Goodwill is property and the attractive force that brings in custom. | The court used it to explain why goodwill can be treated as an asset in section 29 analysis. [Para 168][Para 169] |
| Keech v Sandford (1726) 25 ER 223 | Equity forbids a fiduciary from taking a profit or opportunity that should belong to the principal. | The court used it as part of the fiduciary framework governing post-dissolution profits and information. [Para 150][Para 572] |
| Regal (Hastings) Ltd v Gulliver [1967] 2 AC 134n | Fiduciaries may be accountable for profit from opportunities connected to the fiduciary role. | The court referred to it by analogy when discussing post-dissolution use of information and opportunities. [Para 150][Para 574] |
| Bhullar v Bhullar [2003] EWCA Civ 424, [2003] 2 BCLC 241 | The no-conflict rule can be broader than strict property concepts. | The court used it to contrast section 29 with the wider equitable rule. [Para 146][Para 568] |
Court's Reasoning and Analysis
On section 29, Newey LJ held that “business connexion” is not limited to exclusive customer relationships; it can include any third-party relationship of value or potential value to the partnership, including, in some circumstances, a supplier relationship. He reached that view by combining the statutory language with pre-1890 partnership cases and general fiduciary principles, especially the “no profit” and “no conflict” rules. [Para 52][Para 54][Para 56][Para 59][Para 60][Para 68][Para 69]
Applying that approach, Newey LJ considered the supplier company to be a business connexion because it was selective, central to the partnership’s trading, and actively resisted circumvention of the partnership. He also held that the partnership business was not confined to branded tests, so post-dissolution sales of unbranded tests could still fall within section 29. [Para 383][Para 384][Para 386][Para 394][Para 396]
Snowden and Falk LJJ agreed that the statutory wording had to be read in context, but they rejected the judge’s and Newey LJ’s broader treatment of business connexion. They held that the relationship had to be an asset belonging to the partnership, and that a non-exclusive supplier relationship, without something special or enforceable about it, was not enough; in their view, the judge had not sufficiently examined whether anything about the supplier relationship could be realised in winding up. [Para 549][Para 550][Para 556][Para 559][Para 586][Para 594][Para 650][Para 652][Para 658]
On section 42, Newey LJ accepted the appellants’ argument that the statute contemplates one set of surviving or continuing partners and one outgoing partner, not fragmented continuation by both former partners in different parts of the business. He therefore held that the trial judge had applied the section on the wrong basis and that the section 42 order had to be set aside. [Para 456][Para 457][Para 459][Para 460]
On the unlawful means conspiracy claim brought by Appellant 1, Newey LJ said the judge should have determined the claim on its merits rather than dismissing it because the closing submissions were thin. He considered remittal appropriate because the evidence and pleaded case were before the court, but the trial judge had not been fully assisted on intention. [Para 477][Para 480][Para 487][Para 488][Para 508][Para 509]
On knowing receipt, Newey LJ held that Company A had beneficially received traceable fruits of a breach of fiduciary duty, and that, because Claimant 2 was its sole director and shareholder, the company’s knowledge made retention unconscionable. He therefore concluded that the knowing receipt claim against Company A succeeded. [Para 531][Para 532][Para 536][Para 537]
The judges also rejected the argument that Claimant 2’s serious misconduct automatically barred his claims or released Appellant 1 from his own obligations. They held that the authorities on reciprocity and clean hands did not establish any automatic forfeiture, and that the misconduct was not sufficiently connected to defeat relief under section 29. [Para 418][Para 419][Para 420][Para 424]
Holding and Implications
Appeal allowed in part. The Court set aside the section 42 ruling, allowed the conspiracy issue to be remitted, and held that the knowing receipt claim against Company A succeeded. By majority, the Court also allowed the appeal on the section 29 “business connexion” issue and remitted that question for further determination. The immediate consequence is that Trial 2 must address the extent of any accounting liability and the unresolved conspiracy/busness-connexion issues. [Para 539][Para 540][Para 542][Para 543][Para 661][Para 662][Para 663][Para 664]
Alert